ECR Minerals shares dropped by almost a third after the group unveiled plans to place 400m new ordinary shares at 0.1p each to provide funding until the end of July this year.
Alongside the £0.4m raised through the placing, the company is issuing 157.5m new ordinary shares to creditors of ECR to settle existing and future obligations totalling £157,473, and a further 46.66m shares to directors in lieu of unpaid fees totalling £46,663.20 accrued since late 2012.
Altogether, the shares represent 35.07% of the enlarged ordinary share capital.
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The group also expects to gain further funding through the sale of shares in THEMAC Resources Group, in which it owns in the region of 18.5%, which has a value of around C$1.68m.
Stephen Clayson, Chief Executive Officer of ECR, said: "The proceeds of the placing allow ECR to continue aggressively reshaping its business. Funding market conditions remain torridly difficult for junior mineral companies, and it is clear that any such company aiming to succeed must be creative in the way that it goes about sourcing and deploying capital.
"Accordingly, the company hopes to use the promising exploration opportunity provided by the Itogon gold-silver project in the Philippines and the scope for consolidation in the vicinity of the project to attract a strategic investor who will take a positive long term view on the potential for ECR to generate value for shareholders.
"In the same vein, we are pleased to have commenced the process of realising cash from ECR's interest in THEMAC. In the present financial environment THEMAC is a high risk investment, and we believe that the best course for ECR is to monetise some or all of its interest in THEMAC and use the proceeds to advance the company's other interests."
Looking ahead the group plans to complete due diligence on the Itogon gold-silver project in the Philippines and liaise with the authorities there with regard to renewal of the exploration permit pertaining to the project for a second two year term, evaluate area consolidation opportunities in the context of the Itogon project and attract a strategic investor, and procure a purchaser or joint venture partner for its 100% owned Sierra de las Minas gold project in Argentina.
The share price plunged 29.63% to 0.095p by 09:25. Shares are down over 80% in the past year and 20% in the last month.
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